We shed more light on what President Trump’s ACA executive order could mean. Learn more.

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Jan. 27, 2017

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FEATURED STORY
 

Move Along, Nothing to See Here: Trump’s ACA Executive Order

 
 

Last Friday, within hours of being sworn in, President Donald Trump signed one of his first executive orders, “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal.” The executive order:

  1. Reiterates the President’s intention for “prompt” repeal of the Affordable Care Act (ACA)
  2. Instructs the Secretary of Health and Human Services (HHS) and other department/agency heads to stop the implementation of any ACA provision imposing a “fiscal burden” on any state or any financial or regulatory burden on affected parties (eg, patients, doctors, insurers, manufacturers, etc)
  3. Provides greater flexibility to states implementing healthcare programs
  4. Encourages the development of a “free and open market in interstate commerce” for healthcare services and insurance

Despite its sweeping language, the executive order contains no details of which ACA provisions Trump intends to repeal. Consequently, it caused fierce keyboard tapping, as many tried to project what specific actions the Administration would undergo to dampen the ACA’s impact and requirements.

Based on the authority granted by the executive order, potential changes could:

  • Expand the Obama Administration’s hardship exemption, originally extended to consumers in the so-called “Medicare coverage gap” (ie, would have qualified for Medicaid if their state had expanded coverage), to grant waivers from the ACA’s individual mandate to others facing insurance difficulties
  • Expand the Obama Administration’s “transitional policy,” which allowed people to remain on non-qualifying health plans (“If you like your plan, you can keep it”), to permit the introduction of health plans without providing essential health benefits or other requirements
  • Allow states more waivers to finance and oversee their Medicaid programs

The executive order does not create binding law; it simply acts as a directive to federal agencies to act. What it does do, however, is signal Trump’s intention to carry through on his campaign pledge to dismantle the ACA, even though Congress and his Administration are not yet on the same page about how to replace the healthcare law.

 

Get the Latest From HTA Quarterly: Indication-Specific Pricing: What Should Manufacturers Expect in Key Markets?

 
 

It is not uncommon for a single health technology to have clinical benefit in multiple indications or patient populations. The magnitude of clinical benefit and value of a technology may vary substantially across indications, which can complicate pricing strategies. Indication-specific pricing (ISP) of health technologies, however, may better align reimbursement with value. 

This article, from Xcenda’s Global HEOR team, describes models in which ISP may be implemented and the pricing policies and use of ISP in France, Germany, Italy, Spain, and the United Kingdom (EU-5), as well as in the US. Learn more

 
 

 

 
LEGISLATIVE UPDATE
 

One Step Closer for Price Control (of HHS)

 
 

Rep. Tom Price (R-GA) faced his second Senate hearing in a week on Tuesday, as he testified before the Senate Finance Committee to be HHS Secretary, after facing the Senate Health, Education, Labor, and Pensions (HELP) Committee last week.

This was the more important of the 2 hearings, as the Finance Committee has jurisdiction to vote on Price’s nomination to face a full Senate vote. The hearing began and ended with sharp political divides, as Republicans supported the few concrete answers he provided, such as special insurance pools for patients with pre-existing medical conditions.

Democrats raised objections over Price’s investments in healthcare companies while serving as Chairman of the House Budget Committee, and also were frustrated by Price’s demurring to address policy questions regarding Medicaid block granting to states, Trump’s executive order directing agencies to lift or soften federal rules implementing aspects of the ACA, and whether people would lose healthcare access, among others. Interestingly, while there were few specific policy positions shared, Price signaled that he was inclined to keep the Center for Medicare and Medicaid Innovation intact with modifications.

Senate Finance Committee Chairman Orrin Hatch (R-UT) said he will schedule a committee vote on sending Price’s nomination to the full Senate as quickly as possible.

 

Republicans Offer up ACA Replacement

 
 

Earlier this week, Senators Collins (R-ME) and Cassidy (R-LA) introduced the Patient Freedom Act of 2017, a proposed replacement for the ACA. The bill lays out a plan to keep essential consumer protections put forth in the ACA while dissolving the individual mandate, employer mandate, and other policies, returning many insurance coverage decisions and funding options to the states.

The new bill would provide states 3 options:

  1. Keep the original ACA mandates and requirements and receive the same level of federal assistance
  2. Choose a new state alternative and receive 95% of federal premium tax credits and cost-sharing subsidies, as well as the federal match for Medicaid expansion
  3. Design an alternative solution without any federal funds

Supporters believe giving states more flexibility in how they provide coverage support to their residents will result in more coverage at less cost. Option 2 primarily relies on states auto-enrolling residents into a high-deductible, health savings account plan and allowing residents to purchase alternative plans as needed. The bill ensures important protections like no exclusions for pre-existing conditions, renewability of plans year to year, no discrimination, and allows children to stay on their parents’ plan until age 26.

Congressional Democrats and other critics see the bill as falling short of the ACA and stress that millions of adults and children could lose health benefits due to states receiving less funding than under current law. They also believe out-of-pocket costs will rise given the high-deductible plan structure.

Passing this bill in Congress will be challenging for Republicans. They will need to gain the support of hardline conservatives who do not believe the ACA replacement does enough to reduce the tax increases inherent in the original law. Senate Republicans would also need to convince 8 Senate Democrats to vote in favor of the proposal and thus prevent a filibuster.

 
REGULATORY UPDATES
 

Trump to Government Agencies: Command and Control

 
 

On Inauguration Day last Friday, Reince Priebus, Assistant to the President and Chief of Staff, issued a “Memorandum for the Heads of Executive Departments and Agencies” with the subject line “Regulatory Freeze Pending Review” directing the recipients to “send no regulation to the Office of the Federal Register (‘OFR’) until a department or agency head appointed or designated by the President after noon on January 20, 2017, reviews and approves the regulation.” The memo directs the recipients to immediately withdraw any regulations sent to the OFR but not yet published in the Federal Register, and to postpone the effective date of any published regulations not yet in effect.

At the Office of Management and Budget (OMB) are 2 submissions under review: Program Integrity Enhancements to the Provider Enrollment Process (final rule), and 340B Program Omnibus Guidelines (notice).

Priebus’ memo is an attempt to halt the Obama Administration’s pre-Inauguration regulatory flurry, as it is much easier to delay or repeal regulations not finalized or effective by Inauguration Day.

 

Leftovers Reimagined: MedPAC Reheats Part B and D Solutions

 
 

At its January public meeting, the Medicare Payment Advisory Commission (MedPAC) provided status reports on the Medicare prescription drug benefit (Part D) and Medicare Part B. In some ways, the conversation felt like déjà vu from last year’s public meetings; but, surprisingly, it appears MedPAC might be doubling-down on recommendations that were not well received last year.

While the MedPAC staff presentation was interesting, it was the Commissioner discussion where the action happened. Warner Thomas, President and CEO of the Ochsner Health System, said, “…[A]s I sit here, I don’t think we’re dealing with this with enough urgency. It’s probably the most important issue in the Medicare program today…. [P]robably the most important issue in healthcare in the entire industry is drug pricing.”

Commissioners jumped in with various comments about the Part D program ranging from lack of plan flexibility in terms of formulary development and maintenance to the inability to use copay coupon cards (which was shut down pretty quickly). Some of the discussion narrowed in on the changes in the marketplace, including the uptick in specialty pharmacies, from 2003 when the Medicare Modernization Act established Part D, and today. In future meetings, the Commission will discuss the exceptions and appeals process, the out-of-pocket threshold, and reinsurance. The potential to introduce value-based purchasing in Part D is likely to arise at future MedPAC meetings, though it sounds like this year’s June recommendations for Part D might be a repeat of last year’s reinsurance program changes.

The Friday session kicked off with a staff-presented policy approach for a revamped competitive acquisition program in Medicare Part B. As you might recall, MedPAC was one of the initial proponents of the Medicare Part B payment model demonstration. With that demonstration shelved, MedPAC has come back with a new proposal for consideration—a phased-in overhaul of how Medicare Part B reimburses providers for pharmaceuticals, which would not be fully in place until 2022.

The first phase makes changes (“improvements,” per MedPAC) to the current average sales price (ASP) payment system:

  • Requiring the reporting of ASP for all Part B drugs, and increasing the Civil Monetary Penalty for failing to do so in a timely manner
  • Requiring a reduction in the wholesale acquisition cost (WAC) from WAC + 6% to WAC + 3% (if the ASP add-on decreases, reduce this formula accordingly)
  • Requiring manufacturers to pay a rebate when their product’s ASP exceeds the inflation-adjusted ASP for the billing code

MedPAC staff recommended consolidating billing codes so brand and generic products are paid under 1 billing code; biosimilars would be paid under the reference products’ codes.

These phase 1 changes would be combined with a gradually reduced ASP add-on to encourage enrollment in the Drug Value Program (DVP). DVP is similar to the Competitive Acquisition Program that crashed and burned about 10 years ago. DVP would use private vendors to negotiate prices and offer providers shared savings. To be able to negotiate, DVP vendors would establish formularies and utilization management. This program would be voluntary for providers, but the traditional ASP add-on (currently 6%) would be gradually reduced, encouraging provider enrollment. DVP could reduce beneficiary cost-sharing by providing coinsurance based on negotiated rates (no higher than 100% ASP).

This proposal will continue to evolve through MedPAC discussions. As with all MedPAC discussions and recommendations, the Commission is limited in its capacity as an advisory board. That being said, past recommendations are used as a launch pad for policy changes; however, the Commission’s current recommendations are radical revisions to the Medicare program, which make for interesting future policy-making.

 

CBO Releases 2017–2027 Budget and Economic Outlook

 
 

On Tuesday, Keith Hall, Director of the Congressional Budget Office (CBO), issued a statement following the release of the “2017–2027 Budget and Economic Outlook” report by the CBO detailing the economic forecast of the US for the next decade.

Notably, the Director acknowledged the report was prepared before the Trump Administration took office; therefore, it does “not incorporate any effects of executive orders or other actions taken by that Administration.” He added that the CBO has “no clear basis for judging how the executive order issued last Friday will be implemented,” so the memorandum does not affect its cost or enrollment estimates.

The CBO, along with the Joint Committee on Taxation, estimates that “an average of 12 million people under age 65 will have health insurance in any given month in 2017 as a result of the expansion of Medicaid under the ACA.” Additionally, “9 million people per month, on average, will receive subsidies for non-group coverage purchased through the marketplaces…[and,] an additional 1 million people are projected to be covered by unsubsidized insurance purchased through marketplaces.” The CBO projects approximately 27 million Americans will still be uninsured.

The insurance enrollment estimate is in stark contrast to the CBO’s initial March 2011 estimate of the effects of the ACA’s insurance coverage provisions, in which it predicted Medicaid expansion would add 16 million and the exchanges would enroll 23 million Americans by 2017.

The report contains data both proponents and opponents of the ACA could use to support their respective stances. It will serve as a useful comparison for any reports the CBO develops to estimate enrollment in Republicans’ healthcare plans.

 

Not So Fast: Federal Court Rejects Aetna and Humana Merger

 
 

US District Judge John Bates has ruled that the proposed merger of Aetna and Humana will not advance, citing antitrust grounds. The government had alleged the merger would be likely to substantially lessen competition in markets for individual Medicare Advantage plans and health insurance sold on the public exchanges. Between Aetna and Humana, the companies serve 4.5 million (26.5%) of the nearly 17 million seniors enrolled in Medicare Advantage.

The companies argued that their merger could not be anticompetitive, because they would still have robust competition from a government-run Medicare program serving two-thirds of eligible seniors. Additionally, to alleviate antitrust concerns, the companies had also planned to sell 290,000 Medicare Advantage customer accounts to Molina Healthcare. In response, Judge Bates stated, “Federal regulation would likely be insufficient to prevent the merged firm from raising prices or reducing benefits, and neither entry by new competitors nor the proposed divestiture to Molina would suffice to replace competition eliminated by the merger.”

Aetna spokesman T.J. Crawford said shortly after the verdict, “We’re reviewing the opinion now and giving serious consideration to an appeal after putting forward a compelling case.”

Following the blocked merger, Rick Pollack, President and CEO of the American Hospital Association, issued a press release praising the Court’s decision, stating that had the deal been allowed to proceed, it would have eliminated current competition as well as the possibility of future competition.

Nitin Damle, President of the American College of Physicians, also commended the Court’s decision, commenting that the ruling is a big “win” for patients and the physicians who care for them.

The Court’s decision to block the proposed Aetna and Humana merger is also a win for the biopharmaceutical industry, as the combined insurer would have considerably more market power and ability to drive deeper product discounts and rebates.

 

Information Buffet (AKA, Other Stuff That Caught Our Attention)

 
 

We kept running into stories we wanted to bring to your attention, so here’s a quick hit list of other news we thought you should know:

  • HHS has withdrawn about $5 million in ads promoting HealthCare.gov.
  • The National Academy for State Health Policy provides an overview of ACA provisions and their repeal implications for states.
  • California withdraws its Section 1332 State Innovation Waiver that would have offered new, unsubsidized health insurance plans to “undocumented immigrants.”
  • The Pharmaceutical Research and Manufacturers of America (PhRMA) launches “GOBOLDLY,” a new ad campaign.
  • The Medicaid and CHIP Payment and Access Commission (MACPAC) conducted its January meeting yesterday.
  • The Food and Drug Administration announced the establishment of its new Oncology Center of Excellence to coordinate the clinical review of drugs, biologics, and devices across the agency’s 3 medical product centers.
 

The Affordable Care Act Repeal/Replace/Delay Cheat Sheet

 
 

Republicans in Congress have attempted to repeal the ACA more than 60 times since 2010, but always with the safety net of knowing President Obama would veto the repeal.

Now, with a GOP-controlled House of Representatives and Senate and a Republican President who campaigned on repealing “Obamacare,” the potential for undoing the ACA just got real.

And so did the follow-up question—what comes next?

For our full and complete cheat sheet to the ACA repeal efforts, click here.

 

 
 

 

 
HEARD ON THE STREET
 

Witness Statements for the Hearing on Examining the Effectiveness of the Individual Mandate under the Affordable Care Act, House Committee on Ways and Means Subcommittee on Oversight:

“The hope…is that an individual mandate can obscure the full sticker-price shock to taxpayers because mandated private spending is not officially treated as part of the federal budget. Instead, employers and insurers are enlisted as surrogate “tax collectors” through less transparent and politically accountable means.”

– Thomas P. Miller, Resident Fellow in Health Policy Studies, American Enterprise Institute

Source: “Statement before the House Committee on Ways and Means Subcommittee on Oversight: Examining the Effectiveness of the Individual Mandate under the Affordable Care Act,” January 24
 

“Regardless of the empirical evidence, the health insurance industry as well as health insurance experts have been clear for nearly three decades that some form of a coverage obligation is essential to provide a balanced risk pool and to provide necessary confidence that guaranteed issue can be maintained in a financially sustainable manner.”

– John E. McDonough, Professor of Practice, Department of Health Policy and Management, Harvard T.H. Chan School of Public Health

Source: “Comments for the Record, US House Committee on Ways and Means, Subcommittee on Oversight, Hearing on Health Insurance Individual Responsibility,” January 24

 
 
POLICY BY NUMBERS
 

900%

 

Since the election, the number of women trying to get into Planned Parenthood to get an IUD increased 900%, Cecile Richards, President of the organization, told CNN’s Christiane Amanpour on January 9.

 
UPCOMING MEETINGS & CONFERENCES
 

MGMA 2017 Financial Management and Payer Contracting Conference

February 19–21 l Las Vegas
The MGMA Financial Management and Payer Contracting Conference brings together medical practice management professionals for the financial education that is essential to leading their organizations. Whether you’re new to practice management or you’ve been in the field for several years, building your financial acumen is essential to enhancing your practice’s operations and improving its performance. Meet Xcenda consultants at booth #403. Learn more

 

AMCP 2017 Annual Meeting

March 27–30 l Denver, CO
Join leaders from AmerisourceBergen, US Bioservices, and Xcenda in Denver, Colorado for the 29th Annual AMCP Meeting and Expo at booth #513. Learn more about the integrated solutions and insights that will drive success across healthcare delivery.  Learn more

 
 
 

Count on Health Policy Weekly for an at-a-glance view of legislative and regulatory developments and news that impacts the healthcare industry.

 
 
 
 
 
FEATURED CONTRIBUTORS
 

EDITOR-IN-CHIEF:
Jennifer Snow
Director,
Health Policy
Xcenda

MANAGING EDITOR:
Scott Shields
Associate Director,
Health Policy
Xcenda

 

ADVISORY BOARD:

Peyton Howell, MHA
President | Global Sourcing & Manufacturer Relations | AmerisourceBergen Corporation

Amy Grogg, PharmD
Senior Vice President | Strategy & Commercialization | AmerisourceBergen Specialty Group

Loreen Brown, LMSW
Senior Vice President | Product, Strategy & Commercialization Excellence | Lash Group

Tommy Bramley, PhD, RPh
President | Xcenda

Stacie Heller
Vice President | Government Policy | AmerisourceBergen Corporation

Rita Norton
Senior Vice President | Government and Public Policy | AmerisourceBergen Corporation

Ana Stojanovska
Vice President | Reimbursement & Policy Insights | Xcenda

CONTRIBUTING AUTHORS:

Maureen Holmes | Darren Jensen | Marla Kugel | Scott Shields | Jennifer Snow

PRODUCTION:

Laurie Kozbelt | Ellen Olson

 

Jan. 27, 2017

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